After 151 days, the City has finally provided the Tourism Director contract. Not under our February 27, 2017 request, but as part of a request filed on July 21, 2017, the day after the Attorney General opinion was received.  This FOIA request was responded to in a timely manner, our thanks to the Nauvoo City FOIA Officer.  Our earlier request simply asked for copies of the current contract for the Tourism Director and all other departments of the City, the July 21 request was narrowed to information about the Hotel Motel Board. (See contracts for 2012, 2013, 2014, 2015, 2016, 2017)

It was our contention in earlier conversations directly with the Mayor that this contract was not legal, both in how it was awarded, how it was executed, and how it was being implemented. Our review of the actual contracts confirms that belief.

Since every copy of the contract we received was signed only by the “Hotel/Motel Tax Board Chair”, with no City Council review and approval, no review in a City Council Meeting, and no signature from the Mayor (or any elected official), they are invalid. Further, all payments made related to these contracts would then be improper.

The initial discussions on hiring of a Tourism Director, as referenced in the Hotel Motel Meeting Minutes in 2012, made reference to requesting applications from qualified parties. There was no solicitation of bids, and no competitive bid review completed. We are still waiting on the Meeting Minutes which were withheld without cause to determine the actual process followed, and whether those with a conflict of interest in this selection process recused themselves. This may require legal remedy since the most recent communication we received from the Mayor stated that these were “executive sessions.” We have requested the Mayor review these minutes to determine what information is privileged and provide us with the balance. We have not received this information. Subsequent awards of this contract have not included any bidding process as required by state municipal code (65 ILCS 5/8).

Our July 21, 2017 request also asked that copies of evaluations and reviews related to this agreement be provided. The response from the City states: “We have conducted a search of records and there are no ’employment reviews’ for the Tourism Director from 2012 – present.” This is in spite of the contract’s requirement that “The Hotel/Motel Tax Board will evaluate Orth’s services monthly and request that any deficiencies be corrected.” and that her contract could be renewed “provided the contractor receives consistently favorable monthly evaluations.

The Compensation portion of these agreements is sure to raise eyebrows.  Orth receives a bonus equal to 50% of the increase in tax dollars received by the Hotel/Motel Tax Board over the three year running average of collections.  This bonus is paid regardless of whether there was any correlation between her efforts and the increase, since the bonus payment is not connected to any review process. As you can see in the chart below, FY2016 was a definite setback for the Hotel Motel Board, with the Tourism Director salary and bonus increase exceeding the very limited increase in tax collected (a nearly $7,000 increase in salary for an $800 increase in tax). As a side note, with 76% of the Tax paid to one individual, plus the costs associated with rent, utilities, internet and phone, very little remains for advertising and promotion.

We have previously provided a summary of the challenges with the contention that this position can legally be considered a contractor, and it is unlikely the review currently underway by the IRS will support the contention that Kim Orth is a “contractor”. These documents will certainly create additional issues in that official review.

Additional articles will be provided once our review of the financial documents provided in this FOIA request are completed, and a determination of next steps has been made.

 

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Comments (6)

  • Open minded in Nauvoo

    The municipal code you reference says the city must accept the lowest bid for the contract for public works EXCEPT in a case where a special tax is levied to pay for the work. The hotel/motel tax is a special tax that is used in part to pay for the Tourism Director and office.
    Looking at the contract, tax revenues have risen and the current director is meeting the requirements listed in the contract.
    What is the agenda of “Open Nauvoo” in regard to the tourism office? Are you hoping to eliminate the tax (which is levied on tourists) and with it the tourism office? Or perhaps you have a different candidate in mind for the position of tourism director?

    • openNAUVOO

      OpenNauvoo is not advocating for eliminating the Hotel Motel Tax, but as with all other public funds, we encourage the responsible use of these funds. While it is “tourists” who pay the tax, it is collected with authority provided by the people, and for their benefit. Are we receiving the best benefit? This discussion is not related to who occupies the position, but with how public money is being spent.
      Why any Citizen would be against the solicitation of public bids to ensure we are getting the best value for our money is hard to understand. The City of Nauvoo has an obligation to spend these funds carefully, and wisely. Since bids are not solicited, City Council approval and public hearings have never been involved in these expenditures. And when there is a 17% increase in pay, when only a 2% increase in revenue was reported, and no documented performance reviews accompanied the payment of salary or bonuses, there is ample reason for questions.
      Even considering the bid process was bypassed, what authority was there for the Hotel Motel Board to bypass Nauvoo’s own City Ordinance (2-2-4, 2-2-6, 2-2-7) which required that it be presented to the City Council. And what authority did the Hotel Motel Board Chairmen have to sign for the Citizens of Nauvoo? None!
      The current Tourism Director should be allowed to bid just like any other candidate, and that contract should be reviewed by the Finance Committee, and presented to the City Council for approval. If she is the most qualified, offers the best service, at the most competitive price, with no conflicts of interest that prevent her from bidding, so be it. This process would eliminate bias, conflicts of interest, and other issues.
      This all may be mute if the IRS determines that this position is in fact an employee, and past taxes, workers compensation, social security, etc. are due.
      The related statute does refer to “special taxes”. The Hotel Motel Tax or “Hotel Operators Occupation Tax”, as it is defined by Illinois State Law (35 ILCS 145/), is not “special taxation.” For examples of Special Taxation, see 65 ILCS 5/Art. 11 Div. 111, and 65 ILCS 5/11-83-1. This does not fall under that category.
      In reviewing the contract, it is clear that some loose criteria have been established, however, no performance reviews were conducted to determine effectiveness. And a correlation between Tourism Director actions and tax revenues increasing cannot be shown, due to the lack of documented performance reviews.

  • Open minded in Nauvoo

    Thanks for answering my question, which has led to a few more…
    Isn’t a review of the Tourism Director’s performance done at the monthly Hotel/Motel tax meeting when there is a quorum present? The Director presents their report and the board questions and comments. I would anticipate if there were issues with the director’s performance a dialogue would take place at that meeting.
    As far as the Board Chairman signing off on the contract, isn’t the chairman a representative of the city at large and as such speaks for the citizenry?
    In relation to income taxes and social security, etc., the contract states the Tourism director is responsible for paying those taxes as an independent contractor. Which means they would be paying their share and the city’s share.

    Where were you like to see the Tourism tax funds spent? Roads, parks, events?

    • openNAUVOO

      There is no record of any documented reviews, anywhere, including the Meeting Minutes. There is no record that the three criteria identified in the contract have even been tracked.
      The Hotel Motel Board Chairman is NOT a representative of the City “at large”. He is not elected and has no authority to speak for Citizens. Illinois State Municipal Code and Nauvoo City Ordinances are very clear on the law with regards to spending public funds, and the Hotel Motel Board has violated these laws and ordinances. Any actions taken by the Board, in violation of local and state law, are invalid. Period.
      Review the article on Contractor or Employee for the details, as well as The Cost of Misclassification to see just how big a problem this can be. Just calling someone a contractor does not make it true, and most often is not supported by the facts.
      It’s not a matter of where we would like to see the funds spent. The City itself, at the time Home Rule was being presented to the Citizens, indicated that the reason was to allow a Hotel Motel Tax which would be utilized to improve roads. In spite of the commitment of City Government at the time that no additional taxes would be imposed without referendum, they have been. Any use of public funds should be presented to the Citizens for their input, and Citizens should offer an educated opinion. Hence the need for open, transparent government, and access to all the information. Lack of access to the details of government reduces the ability for Citizens to be involved, and can result in unwise decisions at least, and improper use of funds or conflicts of interest at worst.

  • Open minded in Nauvoo

    Thanks again for your reply.

    As an Independent Contractor, the Tourism Director would be issued a 1099 and expected to make quarterly tax payments out of the monies received. Which puts the take home pay in the low 30’s after tax. Average pay for a Tourism Director starts in the high 30’s up to six figures based on the size of the city and number of visitors. What do you think (as a concerned citizen) is a reasonable rate of pay for a Tourism Director in Nauvoo?

    You’ve mentioned there may be conflicts of interest. Can you be more specific? As far as I’m aware the Tourism Director doesn’t own a business.

    As long as I’ve been a resident we’ve voted on taxes. The hotel/motel tax isn’t levied on citizens and a portion does go directly to the city. What portion (as a citizen) do you think should go to the city?

    • openNAUVOO

      Your mistake is not an unusual one, comparing one person’s gross income to another’s net income, but that’s not the point we’ve been trying to make in any case. It is not a matter of what we, or any other individuals think they would consider a “reasonable rate of pay” unless we were writing a job description for an employee. If the intent is to solicit a contractor for the tasks that need to be completed, then writing a Request For Proposal (RFP) is the traditional method, with the tasks and requirements clearly outlined. In much more detail than the current contract displays. Bids would then be prepared by qualified vendors and reviewed for acceptance by the City.
      The conflict of interest question is a legal question, which we expect will be given additional attention in the coming weeks. Watch for future announcements on openNAUVOO.
      The government is there to serve the needs of the people, and any funds collected are for that purpose, and with the authority given them. This is the background with the Open Meetings Act, and the Freedom of Information Act. Both were created to allow the people to hold their government accountable. 100% of the tax collected by the City, on behalf of the Citizens of Nauvoo, should go to the City. The budget and appropriation process then determines what portion of all tax and revenue will be spent for each purpose. This allows the people to have input and the representatives they elect to authorize spending on their behalf. Once again, the mission of openNAUVOO is to require transparency and access to information by Government, hold Nauvoo City Government accountable for its decisions, and encourage honest, responsible government.

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